In a letter to Dell shareholders, the activist investor maintained that he believes the buyout of the computer company “greatly undervalues” the company but “we have determined that it would be almost impossible to win the battle.”

Shareholders are scheduled to vote on the buyout by Michael Dell and Silver Lake on Thursday after months of wrangling with the Mr. Icahn and other shareholders, including multiple delays of the vote. Mr. Icahn said he decided to end his fight after a ruling from Delaware Chancellor Leo Strine, which said the board and company had run a fair process.

“Michael Dell/Silver Lake waged a hard fought battle and according to Chancellor Strine, the actions by Dell were within the Delaware law,” Mr. Icahn wrote Monday. “We therefore congratulate Michael Dell and I intend to call him to wish him good luck (he may need it).”

While saying he was “saddened” by the result, Mr. Icahn took solace in forcing Mr. Dell and Silver Lake to boost their “best and final” offer. He also said he would continue a process known as “appraisal rights” whereby he is asking a judge to rule on what the fair value of the company is. That could pay him more, or possibly less, further down the line.

In August, Mr. Dell and Silver Lake agreed to pay $13.75 a share, up 10 cents from the initially agreed upon deal, and pay shareholders an 13-cent special dividend along with guaranteeing the third-quarter 8 cent divided. In exchange, the board agreed to change the voting rules in a way that all but assured the deal to pass.

Southeastern Asset Management, his ally in the fight, released a separate statement, echoing Mr. Icahn.

Still, the septuagenarian didn’t go out without throwing a few punches, reserving his shots for the Dell board, which he has been critical of the entire time. Monday, he took particular issue with the board delaying the vote three times when it looked likely to lose the buyout vote.

“We jokingly ask, ‘What’s the difference between Dell and a dictatorship?’” Mr. Icahn wrote. “The answer: Most functioning dictatorships only need to postpone the vote once to win.”

A spokesman for Dell’s special committee wasn’t immediately available for comment.

Update: Dell delayed a shareholder vote three times, not twice, as an earlier update said.